Human surfactant protein B (SP-B) is synthesized as a preproprotein of 381 amino acids which is processed to the 79 residue mature peptide by proteolytic cleavage of N- and C-terminal propeptides in the biosynthetic pathway of the alveolar Type II epithelial cell. SP-B is the only surfactant-associated protein which is absolutely required for postnatal lung function and survival. Complete deficiency of SP-Bresults in lethal, neonatal respiratory distress syndrome and is characterized by a virtual absence of lung compliance, highly disorganized lamellar bodies and greatly diminished levels of SP-C mature peptide. Although the SP-B (-/-)phenotype has been well-characterized, the molecular mechanism(s) underlying SP-B action are completely unknown. This proposal will test the central hypothesis that the fusogenic and/or lytic properties of the 79 residue mature SP-Bpeptide are critical for the (1) processing,of SP-Cproprotein to its mature peptide, (2) organization of phospholipids in lamellar bodies, and (3) formation and maintenance of a surfactant film in the alveolus. Specific aim 1 will test the hypothesis that the mature SP-B peptide is necessary and sufficient to correct phospholipid packaging in lamellar bodies and restore processing of the SP-C proprotein to its mature peptide in Type II cells of SP-B (-/-) mice. Specific aim 2 will test the hypothesis that amphipathic helix 1 of the mature peptide is critical for the fusogenic activity of SP-B in vitro. Specific aim 3 will test the hypothesis that inactivation of the fusogenic activity of SP-B in transgenic mice results in defects in lamellar body organization, SP-C processing and/or lung function.